There are currently over 33 million small businesses in the US alone. Out of those, 20% will close within a year, 50% within 5 years, and a staggering 65% will be out of business within the next decade, according to the Bureau of Labor Statistics.
Apparently, surviving in this economy and seeing your business celebrate a double-digit birthday is quite a difficult task.
So, how do some businesses do it?
Well, the best way for a company to stay afloat in these turbulent times is to be adaptable to change. You have to be able to foresee impending changes in the market and make the necessary moves to accommodate them.
One way to do that is to employ the principles of strategic leadership. If you’re a small business owner, stick around, because in this article we’ll talk about:
- What strategic leadership is,
- Why strategic leadership is essential for the survival of your business,
- What the important characteristics and skills of a strategic leader are,
- What the most notable examples of strategic leadership are, and
- How you can become a better strategic leader.
Let’s get to it!
Table of Contents
What is strategic leadership?
Strategic leadership is the ability to foresee, conceive, and plan for the future, thus creating a goal for your company, all the while seamlessly navigating the operational and organizational forces toward the goal in question.
In other words, strategic leadership means being able to:
- Think about the future,
- Create a vision for your company,
- See the changes that will inevitably happen,
- Make strategies that will help your organization thrive, and
- Coordinate both your resources and your people toward a common goal.
Strategic leadership also involves the execution of all plans, of course.
But, before we can get into the nitty-gritty of how exactly a strategic leader can come about said execution, we first need to know what different types of strategic leadership there are.
What are the 4 types of strategic leadership?
Is a strategic leader just a manager with a plan?
No; while a manager oversees the operational day-to-day tasks of a team, a leader guides and directs others toward a shared goal.
A strategic leader has the ability to envision a strategy. More than a mere plan, a strategy is an agile plan of attack that includes contingencies — clear preparations for potential obstacles that the company may face.
But how does a strategic leader go about making a strategy?
Well, they can go one of 4 ways and tap into their skills of:
- Transactional leadership,
- Transformational leadership,
- Visionary leadership, or
- Collaborative leadership.
Each of these is a type of strategic leadership, so let’s take a closer look at what each of them brings to the table.
Type #1: Transactional leadership
Transactional and transformational leadership (of which we’ll talk more about in the following chapter) are two major types of strategic leadership and two sides of the same coin.
Transactional leadership is directive and relies on transactions that occur between the leaders and their subordinates.
A transactional leader will:
- Ensure that each employee understands their role,
- Measure the employee’s performance, and
- Motivate them to improve their engagement if necessary.
For the most part, they use a system of rewards and punishments to achieve their objectives and ensure all employees follow their directives.
This is a fairly conventional leadership style that usually uses downward business communication — instructional, directive communication that goes from the top (the leader) to the bottom (the employees).
💡 Pumble Pro Tip
Transactional leaders usually use a directing communication style that often seems as dictating. To find out more about it as well as what other communication styles leaders employ, check out the following post:
Type #2: Transformational leadership
The other side of the coin we mentioned is transformational leadership. Often seen as inspirational, transformative leadership relies on leading by example. Transformative leaders inspire others and are often seen as role models.
Transformational leadership relies on effective communication because, without it, the leader can’t communicate their vision.
Transformational leaders are:
- Involved in the project,
- Passionate about it, and
- Able to inspire employees and even boost their morale when things get tough.
💡 Pumble Pro Tip
If you’re interested in learning the ins and outs of transformational leadership, make sure to read this Pumble blog post:
Type #3: Visionary leadership
The third type of strategic leadership is visionary leadership. Much like transformational leadership, visionary or charismatic leadership relies on the leaders creating a vision, goal, or objective, and then inspiring their employees to progress to it.
There are 3 elements to visionary leadership:
- Defining goals,
- Making strategic plans, and
- Motivating others to take action.
Clearly, having a strategy is one of the main components of visionary leadership. A vital part of that strategy is nurturing collaboration within the team (or teams) as well as cultivating learning. However, visionary leaders are also risk-takers.
💡 Pumble Pro Tip
Did you know that Henry Ford was one of the most prominent visionary leaders in history? The Ford Motor Company actually had several visionary leaders at its helm. To learn more about it and find out what the biggest pros and cons of visionary leadership are, head on to the following article:
Type #4: Collaborative leadership
The fourth and final type of strategic leadership is collaborative leadership. Collaborative leaders are those you wouldn’t necessarily recognize as “bosses” immediately. They strive to create psychological safety in the workplace by encouraging employees to contribute and nurturing a collaborative environment.
Collaborative leadership doesn’t rely on hierarchy but on a cross-organizational effort and cross-functional collaboration of everyone involved — managers, employees, and higher-ups — to achieve goals and objectives.
💡 Pumble Pro Tip
Collaborative leadership is often used in companies that require a lot of interdisciplinary collaboration. To find out just how effective it is, read our full blog on the topic:
So, now we know what types of strategic leadership there are. But what makes strategic leadership stand out as such in the first place?
Strategic leadership characteristics
We turned to Christine Spadafor, a lecturer in the Strategic Leadership core at Tuck School of Business at Dartmouth and a lecturer/presenter at Harvard Medical School, to see if she could shed some light on this matter.
She highlighted that strategic leadership differs from the rest because of specific characteristics that strategic leaders have.
“Strategic leaders embrace a holistic view of the business environment, both internally and externally. They focus on building a strong, positive company culture where the well-being of employees is prioritized.
They work toward the short- and long-term sustainability of the enterprise. Strategic leaders constantly ‘scan the horizon’ — anticipating, looking to the future and for opportunities to advance the company’s purpose, mission, and strategic goals.”
So, it seems that being able to foresee the future (to an extent, of course) and having a clear view of the big picture at all times are vital for strategic leadership.
Spadafor agrees and highlights that the strategic approach differs from the “traditional” one in more ways than one:
“Strategic leaders know and address all stakeholders, not only shareholders. They break down silos, understanding the interconnectedness and inter-dependencies among departments and functions are necessary to gain and maintain a competitive advantage.
In contrast, “traditional” leaders more commonly focus on the present and day-to-day operations of a company, typically pushed by the requirement to report quarterly earnings.”
In other words, there are 3 vital qualities that every strategic leader has:
- Being able to see the big picture,
- Maintaining a future-oriented stance, and
- Being capable of embracing change.
What are strategic leadership skills?
To be able to hone the 3 qualities we mentioned above, a strategic leader must possess (and nurture) specific skills:
- Foresight — Strategic leaders anticipate and predict the impending changes in the market to prepare and even stay ahead of them. They monitor their industry, keep a close eye on trends, and ensure their company stays relevant in their field.
- Curiosity — To stay ahead of changes, strategic leaders need to stay curious. They have to look into new ideas and encourage their team members to do the same.
- Decisiveness — When it comes to the decision-making process, strategic leaders need to be quick and precise — but their decisions need to be made with the big picture in mind and based on a previously developed and well-thought-out strategy.
- Active listening — Having the ability to actively listen helps strategic leaders work through issues quickly. Active listeners have access to information that helps them see the whole picture (and not just the issue at hand), which allows them to adjust their strategies and act accordingly.
- Communication — Understanding the importance of team communication is just one layer of a strategic leader’s communication skills. By being an effective communicator, the leader promotes understanding and can better explain their vision.
- Diplomacy — Honesty is the best policy in life but, in business, sometimes it’s necessary to be a bit diplomatic rather than completely honest. A strategic leader should be able to employ diplomacy — tactful honesty — to achieve their goals.
The skills we described above are essential for strategic leadership, but it can also be said that they are necessary for other types of leadership as well. For example, open communication is vital for coaching leadership, while active listening is a necessity for servant leadership. So are there any skills that are crucial for strategic leadership alone?
Yes, there are.
Skill #1: Anticipating
According to a study on strategic leadership skills published in HBR, there are 6 skills that allow leaders to be truly strategic and one of them is the ability to anticipate future trends, as we already mentioned.
But what makes anticipation so important?
This ability can also be marked as strategic thinking or strategic planning. The ability to anticipate doesn’t mean one needs to be clairvoyant in order to be a strategic leader. Instead, a strategic leader is good at making an agile and flexible plan (or strategy) that allows for changes in case of threats or opportunities.
Spadafor highlights that adaptability that stems from anticipation is vital for success:
“A strategic leader exhibits adaptability, agility, and resilience in an uncertain business environment — they know when and how to pivot as necessary and bring others along.”
Having the ability to anticipate trends and think strategically is sorely lacking in leadership.
There are plenty of companies that are titans in their industries, that failed to see the changes their markets were bringing.
Blackberry, for example, was a company that, at one point, had the most used device in the world. And yet, with over 80 million users, their leadership completely failed to anticipate the shift in the market the touchscreen-based technology will eventually make. They were slow to adapt to the innovations and are now not even a blip on the radar when it comes to the mobile market.
Netflix, on the other hand, is a company that serves as a great example of why anticipating is a must-have skill for strategic leadership. Their CEO and Co-Founder saw the market changes and the vast potential of internet streaming and created the empire we now know as Netflix.
Skill #2: Challenging
Strategic leaders are constantly asking, “What if?”
They aren’t satisfied with staying in their lane. Instead, they challenge everything. They question their own and other people’s points of view to get as many perspectives on a specific problem as possible.
This open-mindedness is what, according to HBR helps leaders grow. It allows strategic leaders to make innovative and unpredictable moves — thus staying ahead of market changes.
The ability to challenge means:
- Inviting different (and maybe even opposing) views that challenge our own,
- Questioning long-standing assumptions about one or more problems or aspects of business, and
- Encouraging transparent communication, dialogue, and brainstorming among your team members.
Challenging their point of view is something that comes inherently to strategic leaders. It’s not something they necessarily have to plan for. It can even happen in casual conversation on a team communication app such as Pumble, for example.
Strategic leaders use every opportunity to get new information — and when one doesn’t present itself, they spontaneously create it.
💡 Pumble Pro Tip
To be able to challenge their own and other people’s opinions, strategic leaders need to communicate in a respectful and considerate manner, and that requires them to have a high EQ — emotional quotient. To find out what part it plays in business communication, read the following blog:
Skill #3: Interpreting
Interpreting as a skill directly stems from the previous skill we mentioned — challenging. When you challenge everything, you’re often bombarded with different (often conflicting) information.
Now, if you don’t have the ability to interpret that information and turn it into something that your company can benefit from — it’s basically useless.
That’s why interpreting is so important. Strategic leaders:
- Analyze information,
- Seek patterns,
- Find new insights, and
- Make decisions based on them.
Proper interpretation of information is something that comes easily to strategic thinkers. However, it’s not without its difficulties even if you’re a natural. Different communication styles can lead to misunderstandings while communication barriers can also pose a big problem leading to miscommunication.
💡 Pumble Pro Tip
Communication barriers can hinder open and effective communication. However, they make matters worse in a remote setting that comes with its own set of communication challenges. To learn how to effectively communicate with your remote team, check out the following blog:
Skill #4: Deciding
Now, we already mentioned that decisiveness is a core characteristic of every leader. The burden of being solely responsible for every decision is heavy, but every leader must carry it. That’s especially tough when it comes to making decisions in remote teams or companies because the flow of information is different in a remote setting.
But, remote or not, every leader needs to be decisive.
When it comes to strategic leadership, the decision-making process is especially important.
Being a strategic leader means making the tough calls. However, it also means always having a list of options. Good leaders rarely make decisions based on their “gut feeling”, and they also rarely do it quickly.
As the previous 3 skills would suggest, the decision-making process involves a careful consideration of all options (which is often a part of the “challenging” process).
Strategic leaders usually shy from yes-or-no decisions because they believe there are always (at least one but often more) other options.
Skill #5: Aligning
Strategic leaders need to be active and proactive communicators and align different points of view (between different stakeholders, for example). They often do this by making a compromise in order to achieve the objectives.
They hold open conversations, communicate “before it becomes necessary” just to touch base with stakeholders, and reach out to others on a regular basis. This, in turn, builds trust between team members and other stakeholders and reinforces their belief in the leader’s vision.
Spadafor agrees that aligning different viewpoints with frequent, transparent communication is important:
“A strategic leader is a strong, clear communicator and is transparent, to the extent appropriate depending on the topic. They engage in regular, frequent communications in a mode that resonates most effectively with specific stakeholder audiences.”
Skill #6: Learning
The 6th and final skill that a strategic leader has to have is the ability to learn.
By constantly challenging themselves and others, strategic leaders promote curiosity. Their challenges won’t always yield positive results — but even when they bring failure, strategic leaders will see them as growing and learning opportunities.
Being able to analyze successful and unsuccessful outcomes and learn lessons from them is maybe even the most important skill of any leader, which is why you’ll always hear a strategic leader asking for feedback.
💡 Pumble Pro Tip
Feedback is the cornerstone of effective communication but people are often unsure how to provide it or ask for it. If you struggle with that, you’ll find (more than) a few interesting tips in the following articles:
Strategic leadership examples
Although studies show a lack of strategic leaders in the global workplace — a PwC study shows that only 8% of leaders exhibit strategic skills — there are plenty of examples of strategic leaders in modern (and not-so-modern) history.
Henry Ford, a great visionary leader was also a strategic thinker — he changed the way the workweek looked because he wanted to sell more cars to people. Yes, you read that right; Henry Ford created the workweek as we know it today when he gave his employees two days off instead of one so they would have more time to drive (and thus buy) cars.
Steve Jobs and Bill Gates are also often cited as great strategic leaders. But, although their contributions to their industry (and companies, of course), were quite notable, they aren’t the only people who employed the principles of strategic leadership in order to achieve massive success.
So, let’s take a look at some examples of strategic leadership that you might not have heard of.
Example #1: Jacinda Ardern
The Prime Minister of New Zealand, Jacinda Ardern is an excellent example of a new type of leader who strategically challenges the archetypes and prejudice while carving her spot on the world’s political map.
Over the course of a decade, Ardern fairly quickly and seemingly effortlessly rose through the ranks until she was appointed Prime Minister in 2017. Since then, she has battled crisis after crisis — most notably the COVID-19 pandemic.
Her quick and decisive action during the pandemic as well as strategic, bold decisions to close the country’s borders showed that Ardern is much more than just another politician looking for her 5 minutes under the spotlight.
An effective communicator who isn’t afraid to ask hard questions and discuss various topics (no matter how controversial they are), Ardern quickly became the epitome of a humane, involved, and dedicated politician, which also makes her a shining example of a strategic leader.
Example #2: Steven Spielberg
You might be surprised to find a filmmaker on this list, but Spielberg is actually an excellent strategic thinker. What’s more, he also successfully translated the strategic leadership paradigm onto the silver screen.
As a strategic leader, he was able to predict the changes modern technology would bring into the film industry and jump on the bandwagon immediately. He’s famous for his use of modern technology but also for his strategic approach to storytelling. A good example of that would be his decision not to show the shark until the finale of his critically acclaimed movie Jaws.
Spielberg demonstrates the skills of a strategic leader in other areas as well — he’s not afraid to tackle controversial topics in his movies and is always ready to discuss them.
Example #3: Özlem Türeci and Ugur Sahin
This power couple single-handedly helped the world crawl out from under the pandemic’s thumb.
Both strategic leaders, these two doctors predicted the pandemic two months before it happened, and immediately shifted the efforts of their company — BioNTech — into the making of an effective vaccine.
So, they used their vast knowledge as well as available information to adjust their company’s work in order to achieve a new objective. This decision must not have been easy but it brought us the Pfizer vaccine in the nick of time.
Example #4: Alexandria Ocasio-Cortez
Alexandria Ocasio-Cortez is the youngest woman to ever be elected into Congress. She’s also a risk-taking strategic leader.
She offers a fresh perspective and isn’t afraid to try something new — her use of social media is an excellent example of that.
Her transparent approach to social media as well as her utilization of massive platforms to make sure her voice is heard, is a great strategy (but not one many politicians successfully implemented in the past).
AOC completely dismisses the notion she needs to employ convoluted or formal communication when addressing the voting body of America, thus making it easier for her to connect with them. As a result, it’s easier for her to push her progressive policies and make room for her grassroots activism regarding climate change, economic and racial justice, and other important topics.
What are the 5 principles of strategic leadership?
Becoming a strategic leader isn’t an impossible task. All you really have to do is apply the 5 principles of strategic leadership. Easy-peasy, right?
Don’t worry; we’ll explain everything.
Some of these principles have been mentioned before in this article. However, in this chapter, we’ll put them in perspective for you — rather than list the skills you need to hone, we’ll tell you the steps you need to take.
According to Henry Mintzberg, author of the books Strategy Safari and The Strategy Process, the 5 principles of strategic leadership (and strategy in general) are:
- Plan,
- Ploy,
- Patter,
- Position, and
- Perspective.
Each of these principles is actually a specific approach to strategy. Let’s see what each of them entails.
Principle #1: Plan
In order to be a good strategic leader, you must have a plan. Planning is the cheapest but most vital step in your strategy — so make sure you devote enough time to it. The more planning you do, the more you can minimize the risks, even if you’re making moves that others might deem controversial.
To be able to make a solid plan, you’ll first have to anticipate potential problems or opportunities — and make a strategy for dealing with them.
Principle #2: Ploy
In order to see your company strive, you have to get ahead of the competition. You have to disrupt the market — playing it safe will probably only land you in those 65% of small businesses that fail within a decade.
A ploy is a larger strategy that Mintzberg defines as “an unexpected strategy.” By keeping an eye on the market trends, you might be able to execute a ploy — a move your competitors won’t expect (and which they haven’t planned for).
Principle #3: Pattern
Noticing patterns — seeing how similar organizations have behaved in the past, or observing how your organization behaves at the moment — is a helpful element of strategy.
It allows you to see whether useless, outdated, or harmful patterns have inadvertently become a part of your strategy. After finding out whether that’s the case or not, you’ll be able to cut them out of your plan.
Principle #4: Position
When you’re establishing your strategy, it’s vital that you carefully consider all elements — internal and external — that determine your company’s place in the market. Knowing your company’s position will help you figure out where you want your company to be in the future.
Once you know that, you’ll be able to make a plan in order to hone your brand image, organizational strategy, and other factors that might contribute to you achieving that goal.
Principle #5: Perspective
Of course, the major part of strategic leadership is being able to put things into perspective.
How do all the changes you plan to implement reflect on the bigger picture?
Are they effective when it comes to achieving your vision?
Will they help your organization reach its objectives?
Those are the questions you need to ask yourself.
Why is strategic leadership important?
Strategic leaders think ahead and look to the future for inspiration. Their ability to foresee and adapt makes them excellent leaders, as it allows them to:
- Streamline communication and processes in their organization,
- Motivate their employees to be more productive and engaged,
- Boost innovation in their organization, and
- Ultimately change the trajectory of the organization.
According to Dr. David Trafford, co-author of the book Beyond Default: Setting Your Organization on a Trajectory to an Improved Future, the goal of every strategic leader should be to change the path of their company and take it from the “default future” to one that’s innovative, improved, and (simply) better.
That’s one of the benefits of strategic leadership. Don’t worry; there are more. But, strategic leadership also isn’t without its faults, so, in the following two chapters, we’ll take a closer look at all the pros and cons of this type of leadership.
Benefits of strategic leadership
As mentioned, strategic leaders can completely change their teams and companies and lead them on a path of great success.
But, success isn’t the only benefit this leadership style has to offer.
Let’s take a look at the rest.
Benefit #1: Strategic leadership makes you highly adaptable to change
Predicting change and facing change are two completely different things. While thinking about changes might be anxiety-inducing to some, strategic leaders not only think about it but also adapt to change quite well — even when they don’t necessarily expect it.
By continually planning for the future, strategic leaders are essentially constantly preparing for changes.
Benefit #2: Strategic leadership creates an innovative working environment
Do you remember when we mentioned how strategic leaders always challenge views and opinions? Well, this, along with their tendency to react positively to their own views being challenged, creates a safe environment where employees aren’t afraid to speak up, offer ideas, and take risks. That spurs teamwork and collaboration.
Our expert, Spadafor, highlighted just how important this type of environment is to a strategic leader and mentioned that it has some fringe benefits:
“A good strategic leader ‘lives’ the diverse, inclusive, equitable, holistic culture of the organization. Employees know their work is important and that it matters, how it contributes to achieving the strategy, and are recognized and rewarded appropriately.”
💡 Pumble Pro Tip
Did you know that the more diverse teams are the more likely they are to solve problems quicker? Diversity in teams leads to diversity in communication, which, in turn, leads to an innovative environment. To find out more about this, head on to the following blog:
Benefit #3: Strategic leadership sets clear objectives
Since strategic leadership is very goal-oriented, setting tasks that will help the organization achieve the goals in question is imperative.
As a result, there’s no miscommunication in the team or between the leadership and the employees, since everyone is clear on what their tasks are as well as how those tasks contribute to the company’s objective.
Downsides of strategic leadership
Of course, just like any other type of leadership, the strategic approach has some weaknesses. So, let’s take a look at what ways the strategic approach might be your downfall.
Downside #1: Predicting the future isn’t easy
This probably won’t surprise you but predicting the future is a tough task. Sometimes, no matter how much information you gather or how closely you monitor the market, things will take you by surprise.
Although strategic leaders do their best to live in two worlds — the present and the future — the latter is often a fickle player and refuses to play out the way we envisioned.
Downside #2: Strategic leaders can become micromanagers
The need to see your plans pan out the way you thought (and hoped) they would might become a strong driving force to start micromanaging your team.
Strategic leaders can sometimes get lost in the “big picture” and completely lose sight of the problems that are popping up in the here and now. This puts pressure on their employees to perform tasks they see as “vital” for the bigger picture and forces them to neglect some more pressing matters.
Downside #3: Some strategic plans may be rigid
Although agility is one of the must-have skills for strategic leaders, strategic leaders also have a tendency to be rigid when it comes to the aforementioned “bigger picture.”
As mentioned, strategic leaders plan ahead. They also try to prepare for every obstacle. However, some plans that have been put into effect years (or decades) before simply can’t be adjusted or adapted to new circumstances no matter how hard we try. Thus, planning ahead is a coin that has two sides — and one of them isn’t entirely pleasant.
Expert tips on how to become a strategic leader
Now that we’ve learned the basics of strategic leadership, as well as what you need to do in order to become one, it’s time to see whether there’s something that can help you along on your journey.
As we told you before, becoming a strategic leader takes planning (go figure!) but it’s not impossible.
Here are some tips and tricks that might help you get there faster!
Tip #1: Don’t take things personally
Some leaders find it easy to challenge different points of view as long as they aren’t their points of view.
Although human, that mistake could cost you a lot. After all, it’s the strategic leader’s ability to create a safe space where everyone can contribute their thoughts that makes companies with strategic leaders thrive.
Our expert in strategic leadership, Spadafor, shared that although there are no particular tricks to becoming a good leader, being egotistical is definitely not a strategy you want to try out.
“There are no tricks to becoming a strategic leader – only focus, discipline, hard work, and knowing that it’s not all about you. So, park the ego at the door.”
Tip #2: Always listen carefully (and actively)
After checking your ego at the door, you should make sure to check something else — whether you brought your listening ears.
One of the best tips our expert has for aspiring leaders is that to be a good leader you also need to be a good listener. Here’s her view on why that’s important:
“The BEST TIP to become a better strategic leader: be an ACTIVE listener. There is a difference between listening and actually hearing what is being said. Hear the underlying message, not simply the words. Many times the message and literal words are inconsistent.
So:
- Ask questions.
- Engage in active listening.
- Hear more than you talk.
You’ll learn so much.”
Tip #3: Sharing is caring (and leads to success)
Another great tip that might help everyone become a better strategic leader is to always remember to share your vision.
Keeping your long-term plans close to your chest is an understandable urge. However, in order to be an effective leader, you must have clear goals and plans and be willing to share them with others.
Only when you know your specific goals and have made everyone aware of them will you be able to properly assess whether the day-to-day decisions you make contribute to you achieving those goals or not.
So make sure you consistently communicate with your team members and employees and don’t forget to employ two-way communication. Receiving feedback from others is just as important as giving it.
Wrapping up: Strategic leaders plan for all outcomes (even the ones no one sees coming)
You don’t have to be Bill Gates or Henry Ford in order to be a strategic leader. There are plenty of unsung heroes who used their strategic skills in order to keep their companies afloat (or even ahead) during these trying times.
And you can become one of them, as long as you:
- Anticipate future trends,
- Challenge your points of view and notions,
- Interpret the information you’re presented with,
- Make thought-out decisions,
- Align your strategy, and
- Learn from your mistakes.
And, remember — always be curious, committed to continual learning, and willing to share your vision!
✉️ Do you see yourself becoming a strategic leader? Do you agree with our list of skills every strategic leader needs to have or would you maybe add something to it?
Share your experience and tips at blogfeedback@pumble.com and we may include your answers in this or future posts. And, if you found this blog useful, share it with someone you think would also benefit from it.
